Gold futures slipped over two percent to end sharply lower on Tuesday, mostly on profit taking and with the dollar strengthening against a basket of major currencies. The precious metal had scaled a three-week high yesterday.
The dollar strengthened after the U.S. and the European Union indicated they would consider additional sanctions against Moscow, as pro-Russian activists continued to forcefully occupy government buildings in eastern Ukraine, ignoring a Monday deadline to vacate. Meanwhile, reports indicate Ukrainian forces moving towards the restive areas with armored personnel carriers and tanks, in what seems to be an imminent fightback.
In economic news, China revealed its money-supply growth in March came in lower than expected, notwithstanding some strong credit growth. End March, the broad M2 measure of money supply increased 12.1 percent from last year, but still below the 13 percent rise predicted by analysts and the 13.3 percent growth in February.
Gold for June delivery, the most actively traded contract, plummeted $27.20 or 2.0 percent to close at $1,300.30 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.
Gold for April delivery scaled an intraday high of $1,328.40 and a low of $1,284.40 an ounce.
On Monday, gold futures ended at a three-month high with investors seeking the safe haven of the metal amid escalating tensions in Ukraine and possible further sanctions on Russia.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 806.22 tons from its previous close of 806.42 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.79 on Tuesday, up from its previous close of 79.76 late Monday in North American trade. The dollar scaled a high of 79.90 intraday and a low of 79.69.
The euro traded lower against the dollar at $1.3813 on Tuesday, as compared to its previous close of $1.3821 late Monday in North America. The euro scaled a high of $1.3832 intraday and a low of $1.3792.
In economic news from the U.S., the Labor Department said consumer prices in the U.S. rose by a slightly more than expected 0.2 percent in March, after inching up by 0.1 percent in each of the previous two months. Economists had been expecting another 0.1 percent increase.
The core consumer price index, which excludes food and energy prices, also rose by 0.2 percent in March after ticking up by 0.1 percent for three straight months. Core prices had been expected to inch up by 0.1 percent once again.
Business activity for New York manufacturers was roughly flat in April, the Federal Reserve Bank of New York said in a report on Tuesday, with the index of regional manufacturing activity showing an unexpected 1.3 percent decrease, from a reading of 5.6 in the previous month. Economists expected the index to climb to 8.0.
According to data released by the National Association of Home Builders, homebuilder confidence in the U.S. has seen a modest improvement, with the NAHB/Wells Fargo Housing Market Index edging up to 47 in April, from a downwardly revised 46 in March. Economists expected the index to climb to a reading of 49 from the 47 originally reported for the previous month.
Meanwhile, Federal Reserve Chair Janet Yellen said at an Atlanta Fed banking conference that the Federal Reserve is actively considering new rules to address risks in short-term wholesale funding markets.
U.K. house prices increased at its fastest pace in nearly four years in February, with its house price index rising 9.1 percent annually in February, following a 6.8 percent gain in January. Inflation was the highest since June 2010 and follows the moderate house price increases experienced since April 2012 and is driven in large part by increases in London.
Investor sentiment in Germany weakened for a fourth straight month in April as the effect of the Ukraine crisis continued to weigh, results of a key survey showed Tuesday. Meanwhile, a larger Eurozone trade surplus for February helped to slightly ease concerns regarding a strong euro. The economic expectations index for Germany dropped to 43.2 from 46.6 in March, the Mannheim-based Centre for European Economic Research said. It was the lowest since August last year. The score was worse than the 45 forecast by economists, but much above its long-term average of 24.6.
The material has been provided by InstaForex Company - www.instaforex.com